Updated: Oct 28, 2019
Stocks fell slightly on Wednesday as weak retail sales data, coupled with persisting trade-war fears, offset strong earnings results.
Retail sales unexpectedly dropped 0.3% in September, marking their first decline in seven months. Spending cutbacks on motor vehicles and online purchases, among other factors, weighed down retail sales.
“Given that the U.S. consumer is 68% of the economy, it’s important that the consumer holds up and continues to spend,” said Quincy Krosby, chief market strategist at Prudential Financial. “But we also heard from the banks that consumers are spending. We’re seeing it in credit cards and loans growth.”
“The question is whether that is going to erode,” Krosby said.
The weak data added to recent concerns over the potential for a recession. Global economic data points to slower growth while the U.S. manufacturing sector is already contracting. In the center of those worries is the ongoing U.S.-China trade war, which is becoming increasingly uncertain.
The Wall Street Journal reported there are questions about how much more in U.S. agricultural products China will actually buy and for how long. These worries come even after China and the U.S. agreed last week to the first phase of a broader trade deal.
Meanwhile, Bloomberg News said China wants U.S. tariffs on Chinese goods rolled back before moving forward with the purchases.
“If the president resorts to another round of tariffs, that will increase the probability of a recession, and if we have a recession the stock market drops at least 25%,” Leon Cooperman, founder of Omega Advisors, told CNBC’s “Squawk Box.”
President Donald Trump said Wednesday a deal probably won’t be signed until his meeting with Chinese President Xi Jinping in Chile next month. He noted the deal was currently being worked on.